WelCom News
A newspaper for the Wellington and Palmerston North Catholic Dioceses

Big challenges with rising insurance costs

NEWS

Paul Bayliss
3 February 2012

The financial impact of a review of insurances for many parishes is likely to be significant.

The Wellington, Palmerston North and Auckland dioceses are members of the Catholic Church Underwriting Agency. Insurance broker, FMR Risk, has recently been able to secure insurance cover for all our buildings including schools. This was an outstanding achievement in a challenging environment, but it comes with a high price tag.

The cost of cover for fire and general hazards has remained largely stable, but the overall premium for earthquakes and other natural hazards has doubled. Premiums for Wellington parishes will be much higher than others because they are influenced by local earthquake risk.

For buildings built before 1935 that are not up to two-thirds of the current building code, the cover is indemnity value only. This may turn out to be a modest figure if little has been spent on a building over its life.

Our advisors are now calculating the premiums for each parish, taking into account their buildings and location.

Most importantly, the insurance package negotiated for us by FMR Risk, while expensive, has bought the archdiocese the time we need to work through our property issues.

For example, preliminary analysis suggests that 80 percent of the buildings in the archdiocese (excluding schools) may not, to some degree, meet the current building code.

The archdiocesan office is funding initial engineering assessments and more than 40 will be complete by the end of March 2012.

School buildings are in a better position with only about 20 percent having some issues and Catholic Schools Board is completing comprehensive assessments to ensure schools can continue to operate safely.

New information will often raise difficult questions rather than provide final answers. For example, what do we do if a parish building is found to be officially ‘earthquake prone’? When should a building be closed? How do we decide on remedial work? How will such work be funded? And who decides?

Paul Bayliss is general manager of the Archdiocese of Wellington.

See also Earthquake risk assessment goes ahead